Supreme Court says Advocates cannot enter into arrangements contrary to law

Supreme Court says Advocates cannot enter into arrangements contrary to law

The Supreme Court (SC) on 5 January 2021, in the case of Kirti & Anr. Etc. v. Oriental Insurance Company Limited, had held that advocates are restricted to throw away legal rights of parties and they cannot enter into arrangements that are contrary to law. Any concession in law made by the advocates would not be binding on the parties

Name of the case: Kirti & Anr. Etc. v. Oriental Insurance Company Limited

Case No.: Civil Appeal Nos. 19-20 of 2021 [Arising out of Special Leave Petition (C) Nos. 18728-29 of 2018]

Court: Supreme Court of India

Bench: Justices Surya Kant, N.V. Ramana, and S. Abdul Nazeer

Date of Decision: 5 January 2021

Brief facts of the case

The facts of the case are that the deceased couple was commuting on a motorcycle in Delhi. On the way, they met with an accident that resulted in immediate incapacitation to both of them. The couple passed away due to cranio-cerebral damage and hemorrhagic shock. The cause of death was the trauma of the accident.

An FIR was registered against the driver who caused the accident under Section(s) 279 and 304 of the Indian Penal Code. An independent eyewitness's statement was recorded who witnessed the accident occurred due to rash driving and negligence of the car driver.

A claim petition was filed under Section 166 of the Motor Vehicle Act, 1988 (Act) by the two daughters and parents of the deceased. The driver contested the petition by stating that the deceased were themselves negligent and the accident occurred because of them. An amount of Rs 6.47 lakh for the death of the wife and Rs 10.71 lakh for the husband was offered by the insurance company as compensation.

Three surviving dependents who were two minor daughters and father of the two deceased [Kriti & Anr.] (Claimants), filed civil appeals before the SC. The civil appeals were filed against the impugned judgment of the Delhi High Court (HC) dated 17 July 2017. In the said judgment the HC reduced the amount of compensation to Rs. 22 lakh from Rs. 40.71 lakh that was awarded by the Motor Accident Claims Tribunal (Tribunal) Rohini, under Section 168 of the Act.

Award of the Motor Vehicle Tribunal

The Tribunal determined the ages of the deceased couple being 26 and 29 years respectively. An age multiplier of 17 was adopted. Contentions were made by the claimants regarding the earnings of the deceased couple and accordingly the Tribunal awarded a compensation of Rs 40.71 lakh.

The Oriental Insurance Company Ltd. (respondent/opposite party) challenged the computation done by the Tribunal and argued that it had erroneously relied upon the contentions of the claimants regarding the earnings of the deceased couple as there was no proof that both the deceased were employed in Delhi.

The respondent argued that the compensation should be halved on grounds of contributory negligence. An appeal was made to the HC against the award passed by the Tribunal.

Decision of the Delhi HC

The HC agreed to the contentions made by the insurance company and it reduced the income for both deceased. The HC adopted the method of the lowest minimum wage for computing wages of the deceased and mentioned that it should be applicable for unskilled workers in Haryana instead of Delhi. The HC reduced the amount of compensation payable to the claimants to Rs. 22 lakh. The claimants filed civil appeals before the SC challenging the judgment of the HC.

Relief sought before the SC

The claimants requested the SC for re-computing the amount of compensation and referred to a judgment of the Constitutional Bench of the SC in the case of National Insurance Co Ltd v. Pranay Sethi (2017) 16 SCC 680, wherein the Constitutional Bench of the SC settled the law on prospects for non-permanent employees. They further requested the SC to decide the case on merits.

Observations and reasoning of the SC

The SC stated that at the time of death, there were four dependents of the deceased and not three. However, the reason for the death of the deceased's dependent mother during the pendency of the proceedings should not be a reason for reducing the compensation amount. It further clarified that while computing the compensation amount the claims and liabilities have to be crystallized at the time of the accident itself.

It further stated that as the appellants/claimants cannot rely upon subsequent increases in minimum wages; similarly the respondent/insurer cannot seek the benefit of the fact that the death of a dependent occurred during the pendency of legal proceedings.

The SC further clarified that any concession in law made by either counsel would not be binding on the parties. As advocates cannot throw away legal rights or enter into arrangements contrary to law.

Taking into account the age of the deceased, the SC made the following observations -

"Given how both deceased were below 40 years and how they have not been established to be permanent employees, prospects to the tune of 40% must be paid. The argument that no such prospects ought to be allowed for those with notional income, is both incorrect in law (Sunita Tokas v. New India Insurance Co Ltd, 2019 SCC OnLine SC 1045) and without merit considering the constant inflation-induced increase in wages. It would be sufficient to quote the observations of this Court in Hem Raj v. Oriental Insurance Co. Ltd. [(2018) 15 SCC 654], as it puts at rest any argument concerning non-payment of future prospects to the deceased in the present case:

"7. We are of the view that there cannot be a distinction where there is positive evidence of income and where minimum income is determined on guesswork in the facts and circumstances of a case. Both the situations stand at the same footing. Accordingly, in the present case, addition of 40% to the income assessed by the Tribunal is required to be made."

Important observations by Justice N.V. Ramana made in a Separate Judgment

Justice N.V. Ramana while passing a separate judgment in the instant matter, referred to many important case laws/precedents of the SC that includes - Hem Raj v. Oriental Insurance Company Limited, (2018) 15 SCC 654; Sunita Tokas v. New India Insurance Co. Ltd., (2019) 20 SCC 688, wherein Justice Surya Kant considered (future) prospects in cases pertaining to national income.

He made important observations concerning the issue of 'calculation of notional income for homemakers and the grant of future prospects with respect to them', for computing and granting of the compensation amount. Following are the observations made by the Justice -

"a. Grant of compensation, on a pecuniary basis, with respect to a homemaker, is a settled proposition of law

b. Taking into account the gendered nature of housework, with an overwhelming percentage of women being engaged in the same as compared to men, the fixing of notional income of a homemaker attains special significance. It becomes recognition of the work, labour, and sacrifices of homemakers and a reflection of changing attitudes. It is also in furtherance of our nation's international law obligations and our constitutional vision of social equality and ensuring dignity to all.

c. Various methods can be employed by the Court to fix the national income of a homemaker, depending on the facts and circumstances of the case.

d. The Court should ensure while choosing the method and fixing the notional income, that the same is just in the facts and circumstances of the particular case neither assessing the compensation too conservatively nor too liberally.

e. The granting of future prospects, on the notional income calculated in such cases, is a component of just compensation."

Decision of the SC

While allowing the said appeal, the SC increased the amount of compensation to a new total of Rs 33.20 lakh. It further directed that the enhanced amount of compensation should be paid within two months along with interest @ 9% per annum.

That the amount shall be computed from the date of filing of the Detailed Accident Report i.e. 23 May 2014, and shall be apportioned according to the terms laid down by the Tribunal.